Correlation Between HK Electric and Genco Shipping
Can any of the company-specific risk be diversified away by investing in both HK Electric and Genco Shipping at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining HK Electric and Genco Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HK Electric Investments and Genco Shipping Trading, you can compare the effects of market volatilities on HK Electric and Genco Shipping and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in HK Electric with a short position of Genco Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Genco Shipping.
Diversification Opportunities for HK Electric and Genco Shipping
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between HKT and Genco is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Genco Shipping Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genco Shipping Trading and HK Electric is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on HK Electric Investments are associated (or correlated) with Genco Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genco Shipping Trading has no effect on the direction of HK Electric i.e., HK Electric and Genco Shipping go up and down completely randomly.
Pair Corralation between HK Electric and Genco Shipping
Assuming the 90 days trading horizon HK Electric is expected to generate 6.72 times less return on investment than Genco Shipping. But when comparing it to its historical volatility, HK Electric Investments is 2.26 times less risky than Genco Shipping. It trades about 0.1 of its potential returns per unit of risk. Genco Shipping Trading is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,389 in Genco Shipping Trading on August 31, 2024 and sell it today you would earn a total of 159.00 from holding Genco Shipping Trading or generate 11.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. Genco Shipping Trading
Performance |
| Timeline |
| HK Electric Investments |
| Genco Shipping Trading |
HK Electric and Genco Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Genco Shipping
The main advantage of trading using opposite HK Electric and Genco Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric position performs unexpectedly, Genco Shipping can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Genco Shipping will offset losses from the drop in Genco Shipping's long position.| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
| Genco Shipping vs. Clarkson PLC | Genco Shipping vs. Wilh Wilhelmsen Holding | Genco Shipping vs. Superior Plus Corp | Genco Shipping vs. NMI Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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